Magazine article Editor & Publisher

Time to Buy Newspaper Stocks?

Magazine article Editor & Publisher

Time to Buy Newspaper Stocks?

Article excerpt

Stock prices of newspaper companies are so low -- depending on the chain, they've lost between 55% and 99% of their value in the past year -- that it's tempting to think the time to buy has finally arrived.

Indeed, Mario Gabelli, a longtime investor in the newspaper sector through his Gamco and related funds, raised eyebrows in recent weeks by increasing his stakes in three stocks: Journal Communications Inc., E.W. Scripps Co. and Media General Inc. But a media analyst affiliated with Gabelli's investment company notes a critical common characteristic of the three publishers: They have substantial holdings in broadcast.

"If you look at Journal Communications, for instance, it's more of a television broadcaster than a newspaper publisher," says Barry L. Lucas, senior vice president for research for Gabelli & Co. Journal Communications publishes just one daily, the Milwaukee Journal Sentinel, and roughly two-thirds of its cash flow comes from broadcast, he adds.

Lucas rates Journal Communications stock, which in late January had fallen 71.75% from its highest price in 2008, as a buy in part because he believes broadcasters have more opportunities to develop revenue from mobile technology. "It puts it in a better light than ink-on- paper, where you just don't have the same opportunities," says Lucas, who does not own any stock in the company and is not among those who determine where Gabelli & Co. …

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